Zombie Nightmares Arise from Post-Foreclosure Graveyard

Have you received calls from debt collectors following a strategic default or hardship loss of your home to foreclosure? According to a Reuter’s report filed October 14, 2014, the Inspector General has urged the Fair Housing Finance Agency to direct Fannie Mae and Freddie Mac to pursue collections by seeking deficiency judgments against people who are now in a position to pay back deficiencies resulting from foreclosures, e.g, the difference between the loan amount and the foreclosure value. In the past year in Florida alone, approximately 10,000 lawsuits have been filed by bank collectors, representing hundreds of millions of dollars in bank claims, Reuters reported.

According to Reuters, Ira Rheingold, executive director of the National Association of Consumer Advocates, said, “This is monumentally unfair and damaging to the economy.
It prevents people from moving forward with their lives.” For people struggling to dig themselves out of financial difficulty and just getting back on their feet, these unexpected collection notices can spark nightmares.

If you defaulted on a mortgage more than five years ago, you may have no cause for worry. Several states, including Florida, have recently enacted laws limiting the time financial institutions have to sue for the debt after a foreclosure. “In Florida, for example, financial institutions, now only have a year after a foreclosure sale to sue — down from five” years, according to the Reuter’s report, in which a Freddie Mac spokesperson also said decisions to pursue collection are made on a case-by-case basis.

If you are being hounded by debt collectors for “zombie” debts resurrected from the past because a bank foreclosed on your property, please contact a qualified attorney to explore your legal options. Daley Law can help. Email us at staff@daleylaw.com or fill out the query form at www.DaleyLaw.com.